The Telecommunications Act of 1996 is a United States federal law enacted by the 104th United States Congress on January 3, 1996, and signed into law on February 8, 1996, by President Bill Clinton. It primarily amended Chapter 5 of Title 47 of the United States Code.
The act was the first significant overhaul of United States telecommunications law in more than sixty years, amending the Communications Act of 1934, and represented a major change in American telecommunication law, because it was the first time that the Internet was included in broadcasting and spectrum allotment.
The goal of the law was to "let anyone enter any communications business – to let any communications business compete in any market against any other." The legislation's primary goal was deregulation of the converging broadcasting and telecommunications markets.
The law's regulatory policies have been criticized, including the effects of dualistic re-regulation of the communications market.
Background
Prior regime
Previously, the Communications Act of 1934 ("1934 Act") was the statutory framework for U.S. communications policy, covering telecommunications and broadcasting. The 1934 Act created the FCC, the agency formed to implement and administer the economic regulation of the interstate activities of the telephone monopolies and the licensing of spectrum used for broadcast and other purposes. The Act left most regulation of intrastate telephone services to the states.
In the 1970s and 1980s, a combination of technological change, court decisions, and changes in U.S. policy permitted competitive entry into some telecommunications and broadcast markets. In this context, the 1996 Telecommunications Act was designed to allow fewer, but larger corporations, to operate more media enterprises within a sector (such as Clear Channel's dominance in radio), and to expand across media sectors (through relaxation of cross-ownership rules), thus enabling massive and historic consolidation of media in the United States. These changes amounted to a near-total rollback of New Deal market regulation.
Stated objective
The 1996 Act's stated objective was to open up markets to competition by removing regulatory barriers to entry: The conference report refers to the bill "to provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced information technologies and services to all Americans by opening all telecommunications markets to competition".
Enactment
The Act was approved by the 104th Congress on January 3, 1996, and was signed into law on February 8, 1996, by President Bill Clinton. It was the first bill signed at the Library of Congress.
Framework
A purpose of the 1996 Act was to foster competition among companies that use similar underlying network technologies (e.g., circuit-switched telephone networks) to provide a single type of service (e.g., voice). For example, it creates separate regulatory regimes for carriers providing voice telephone service and providers of cable television, and a third for information services.
Preemption One key provision allowed the FCC to preempt state or local legal requirements that acted as a barrier to entry in the provision of interstate or intrastate telecommunications service.
Interconnectedness Since communications services exhibit network effects and positive externalities, new entrants would face barriers to entry if they could not interconnect their networks with those of the incumbent carriers. Thus, another key provision of the 1996 Act sets obligations for incumbent carriers and new entrants to interconnect their networks with one another, imposing additional requirements on the incumbents because they might desire to restrict competitive entry by denying such interconnection or by setting terms, conditions, and rates that could undermine the ability of the new entrants to compete.